State of Ohio Monthly Financial Report for June 2020 · 1.8 million jobs lower than in February. Financial activities. added 32,000 jobs with over half of the increase coming from

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July 10, 2020

MEMORANDUM TO: The Honorable Mike DeWine, Governor

The Honorable Jon Husted, Lt. Governor

FROM: Kimberly Murnieks, Director

SUBJECT: Monthly Financial Report

Report Overview:

Fiscal year 2020 concluded on June 30 with a balanced budget, despite General Revenue Fund tax revenues

ending the year $1.1 billion (4.6%) below budgeted estimates. The state budget was balanced through a

combination of fiscal controls and cost-containment measures instituted in March at the onset of the pandemic,

Executive Order budget reductions implemented in the final quarter as the pandemic continued to impact

revenues, and shifting Medicaid expenses from state to federal share utilizing the enhanced Federal Medical

Assistance Percentage (FMAP) authorized by Congress in the Families First Coronavirus Response Act.

The Bureau of Labor Statistics reported that the national unemployment rate declined

to 11.1 percent in June, a 2.2 percentage point decline from May. Nationally, the

number of unemployed individuals fell by 3.2 million to 17.8 million.

FEWER NEW UNEMPLOYMENT CLAIMS

June auto sales tax revenues were $175.7 million, $34.1 million (24.1%) above

estimate. Total fiscal year 2020 auto sales tax revenues ended $45.3 million (2.9%)

below estimate. This overage in June 2020 Ohio auto sales tax revenue diverges from

the more modest national new vehicle sales data due to a combination of high used

vehicle sales and large levels of variation between economic activity in different

states due to the impact of COVID-19.

AUTO SALES TAX ABOVE ESTIMATE

LARGEST Q2 GDP DECREASE REMAINS

The consensus among forecasters remains that GDP will decrease during the second

quarter, with preliminary third quarter estimates predicting the beginnings of

resumed growth that would lead to a full recovery by the end of calendar year 2021

(state fiscal year 2022). These estimates are dependent on the infection rates of

COVID-19, the measures states take in reopening their economies, and the

willingness of individuals to re-enter the economy.

TAX REVENUES BELOW

ESTIMATE

June tax revenues were $50.5 million (2.2%) below estimate, a stronger outcome

than last month when revenues ended 13.0 percent below forecast. Total GRF

receipts were $3.5 billion, $126.9 million (3.7%) above estimate, primarily due to a

substantial overage in Federal grant receipts.

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Economic Activity

Real Gross Domestic Product

(GDP) contracted at an annual rate

of 5.0 percent in the first quarter of

calendar year 2020, according to

the final estimate by the Bureau

of Economic Analysis. This decline

was the first since quarter one of

2014 and the largest decrease since

the fourth quarter of 2008, when

real GDP declined by 8.4 percent.

This decrease represents the eighth

largest decline on record dating

back to 1947, tied with the second

quarter of 1975. The largest

quarterly decline on record was 10.0 percent in the first quarter of 1958. In Ohio, the GDP for the

state fell slightly more than the national average (-5.5%) between the fourth quarter of 2019 and the

first quarter of 2020.

Nationally, the first-quarter decrease in real GDP reflected negative contributions from personal

consumption expenditures (-4.7%), private inventory investment (-1.8), exports (-1.1), and

nonresidential fixed investment (-0.9%). These decreases were partially offset by increases in

residential fixed investment (0.7%) and government consumption expenditures and gross investment

(0.2%). Imports, which are included in the above categories and then subtracted in a separate category,

increased, effectively adding to other categories by a total of 2.3 percent.

Small business owners were more

optimistic in May than in April. The

National Federation of Independent

Business (NFIB) produces the Small

Business Optimism Index by

surveying a sample of small-business

owners each month. In May, there was

a national increase of 3.5 points, with

the index rising to 94.4, reversing

much of the decline seen in April. The

index for the Great Lakes Region also

increased slightly from 91.4 in April to

93.2 in May. Overall, eight of the ten

index components improved in May.


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The Uncertainty Index rose in May by 7 points to 82 percent. Although business owners are taking

precautions to reopen safely, fears of a resurgence of COVID-19, uncertainty over when consumers

will return to spending and evolving government policies all contributed to the increase in uncertainty.

Expectations of real sales in the next three months increased by 18.0 points, a rebound after the lowest

reading in the survey’s history. Although the number of small business owners who reported having

job openings that they could not fill decreased by 1.0 point, the number that reported plans to increase

employment in the next three months increased by 6.0 points to 8.0 percent.

The Conference Board’s composite

Leading Economic Index (LEI) is an

index designed to reveal patterns in

economic data by smoothing volatility

of its ten individual components. In

May, the LEI increased 2.8 percent

after the sharp decline that began in

March, signaling a partial recovery.

Recent improvements in the number of

unemployment insurance claims are

responsible for roughly two-thirds of

the improvement in the index. Gains

were also made in labor markets,

housing permits, and stock prices to

helping restore some previous losses.

Consumer’s outlook on the economy, the Leading Credit IndexTM and new orders in manufacturing,

however, suggest continued weak economic conditions. The Conference Board concluded that the

overall decline between February and April indicated that the U.S. economy will remain in recession

in the near term.

The Ohio economy expanded slightly in May. The state-level coincident economic index produced

by the Federal Reserve Bank of Philadelphia is a composite of four labor market indicators – non

farm payroll employment, average hours worked in manufacturing, the unemployment rate, and real

wage and salary disbursements. The Ohio index increased 4.5 percent after the largest-ever decline

in April (the index dates back to 1979). The six-month smoothed rate of change fell from -0.5 percent

in March to -3.9 percent in April and remained lower at -3.2 in May, confirming that the Ohio

economy has entered a recession induced by the COVID-19 pandemic. Between March and May,

the diffusion of state-level coincident economic indexes decreased in all 50 states for a three month

diffusion index of -100. This is largely driven by continued high unemployment rates. Over the

past month, the indexes in 33 states increased, 16 states decreased, and one state remained stable.

This resulted in a one-month diffusion index of 34.

The consensus among forecasters remains that real GDP will have contracted dramatically in the

second quarter. Real GDP is forecasted to contract due to anticipated weaker personal consumption

expenditures. Forecasters anticipate a rebound in the third quarter going into the fourth as preliminary

third quarter forecasts indicate positive expansionary percentages in GDP. The economy is currently

forecasted to reach full recovery by the conclusion of calendar year 2021; however, these forecasts

are dependent upon containing the spread of of COVID-19, the rate at which the economy re-opens

and the willingness of consumers to re-enter the marketplace.




Source Date 2nd Quarter GDP Forecast

Federal Reserve Bank of New York (NowCast) 7/02/20 -15.1%

Federal Reserve Bank of Atlanta (GDPNow) 7/02/20 -35.2%

IHS GDP Tracker 7/02/20 -42.7%

Moody’s 6/30/20 -33.4%

Wells Fargo 6/09/20 -37.6%

Conference Board 6/10/20 -39.5%

Wall Street Journal Survey 6/01/20 -33.5%

Employment

The U.S. Bureau of Labor Statistics

reported that total non-farm pay-

roll increased by 4.8 million jobs in

June. This is followed by an increase

of 2.7 million in May. Improve-

ments in non farm payroll are at-

tributed to the increase in economic

activity due to the reopening of

many state’s economies following

the lifting of stay-at-home orders.

The biggest contributor to the increase

in total non farm employment was the

leisure and hospitality industry,

which increased by 2.1 million jobs

and accounts for two-fifths of the gain.

Employment in retail trade rose by 740,000 in June, though still remaining 1.3 million lower than in

February. Education and health services employment increased by 568,000 in June but remains

nearly 1.8 million lower than in February. This increase was due to the growth of employment in

health care (358,000), social assistance industry (117,000), and private education (93,000) in June.

The only sector within the education and health services industry that saw a continued decrease in

health care employment was nursing care facilities (-18,000). Employment in the other services

industry increased by (357,000), about three-fourths of this increase occurred in personal and laundry

services (264,000).

Manufacturing employment increased by 356,000 in June. Increases concentrated within durable

goods such as motor vehicles and parts (196,000), which accounted for over half of the job gains.

Within non-durable goods the largest increase was in plastics and rubber products (22,000).

Construction employment saw a gain of 158,000 in June following a substantial gain of 453,000 in

May. Employment in transportation and warehousing added 99,000 jobs in June following two

months of declines. Wholesale trade employment increased by 68,000 jobs in June but remains down

317,000 from February values. Employment in mining continued to decline with a decrease of 10,000

jobs in June.




Professional and business services increased jobs by 306,000 in June, although employment remains

1.8 million jobs lower than in February. Financial activities added 32,000 jobs with over half of the

increase coming from real estate. Government employment increased by 33,000 jobs in June but

remains 1.5 million below the February level.

Ohio non-farm payroll employment increased to 4.83 million jobs in May, a 2.7 percent

increase over April. Despite the increase, non farm employment remains down 13.6 percent

from last year. Sectors with the greatest job increases included Leisure and Hospitality

(36,600), Trade, Transportation, and Utilities (31,400), Construction (19,200), Manufacturing

(19,000), Education and Health Services (17,000), Professional Business Services (11,900) and

Other Services (13,900). These gains were partially offset by losses in Government (-23,300).

The Bureau of Labor Statistics

reported that the national

unemployment rate declined to 11.1

percent in June, a 2.2 percentage point

decrease from May. Nationally, the

number of unemployed individuals

fell by 3.2 million to 17.8 million.

Even though unemployment fell in

both May and June, the jobless rate is

still 7.6 percentage points higher and

the number of unemployed 12.0

million higher than February values.

In March and April economic activity

stalled due to the coronavirus;

however, as the economy has begun to

reopen improvements in the labor market have followed.

Unemployment rates for the month varied by demographic group. In June, the unemployment rate for

adult men was 10.2 percent, for adult women 11.2 percent, and for teenagers, 23.2 percent. Compared

to May, unemployment rates also declined across racial categories. In June, individuals who identify

as Black had an unemployment rate of 15.4 percent, Hispanic at 14.5 percent, Asian at 13.8 percent,

and White at 10.1 percent.

Temporary layoffs for those who are unemployed decreased to 10.6 million in June, a 4.8 million

decline from the previous month. Permanent job losses continued to increase, reaching 2.9 million

in June, a growth of 588,000. Reentrants are individuals who had previously worked but were not in

the workforce prior to starting their job search. Unemployed reentrants to the labor market increased

to 2.4 million, a growth of 711,000.

Nationally, individuals with jobless periods of less than 5 weeks and jobless periods of 5 to 14 weeks

both declined. Unemployed individuals who were jobless less than 5 weeks declined to 2.8 million

in June, and those who are jobless 5 to 14 weeks declined to 11.5 million, this encompasses 65.2

percent of those who are unemployed. The number of individuals jobless 15 to 26 weeks and those

who are considered long-term unemployed, however, saw increases. Unemployed persons jobless

15 to 26 weeks increased to 1.9 million. Unemployed individuals that are long-term unemployed

increased to 1.4 million.




The labor force participation rate increased by 0.7 percent in June to 61.5 percent. The labor force

participation rate remains below its February level by 1.9 percent. Total employment in June rose to

142.2 million, a 4.9 million increase from May. The employment-population ratio is at 54.6 percent,

which is a 1.8 percentage points increase from May. This remains 6.5 percentage points lower than

the pre-pandemic levels in February.

The Ohio unemployment rate decreased to 13.7 percent in May from a high of 17.6 percent in April.

By the week ending June 13, 2020 initial unemployment claims had fallen to 34,926, from the

peak week in March when 274,288 initial claims were filed. Continued claims in Ohio

decreased substantially between the peak in April (777,214 claims) and the week ending June 13,

2020, in which 466,363 individuals filed continued claims for unemployment insurance.

Consumer Income and Consumption

Personal income decreased in May by 4.2 percent after having increased 10 percent in April. Wage

and salary disbursements, the largest portion of personal income, increased 2.7 percent in May. The

decline in personal income in May was due to a 17.2 percent decline in the federal economic recovery

incentive payments sent to individuals and families in response to the COVID-19 pandemic. These

payments continued in May, but at a lower level than in April. The decrease in social benefits was

offset by an increase in unemployment benefits, including the additional $600 per week that

unemployed workers are currently receiving because of the pandemic.

Personal consumption expenditures

measures consumption of gross

domestic products. The Personal

Consumption Index (PCE) increased

8.2 percent in May. The increase in

PCE is linked to growth in spending on

motor vehicles and parts (37.5%),

recreational goods and vehicles

(24.3%), health care (23.7%) and food

services and accommodations

(24.3%).

The PCE price index, which excludes

food and energy, increased 0.1 percent. Spending on non-durable goods increased 7.7 percent due

to a significant increase in the purchase of clothing and footwear which was up 43.5 percent for

May after a decline of 25 percent in April. Gasoline and other energy goods increased 23.9 percent in

May, after an equivalent decline in April.

Spending on durable goods increased 28.6 percent, led by a 37.5 percent increase in motor vehicles

and parts. Unit sales of light motor vehicles decreased to 8.7 million in April and increased to 12.2

million (40.2%) in May.

There were minimal decreases in May except in final consumption expenditures for nonprofit

institutions which fell -17.15 percent. Housing and utilities also experienced a decline of -0.21

percent.




The latest survey results indicate that

consumer expectations for the

economy are increasing but with some

hesitation due to a potential resurgence

in coronavirus cases. The University

of Michigan’s Consumer Sentiment

Index increased to 78.1 in June.

Despite some reductions in the last

half of June, the index rose 5.8 points

over May, making this the second

month of gains following an April low.

This growth in consumer confidence is

tied to the reopening of the economy

and a reduction in unemployment

claims. A resurgence of COVID-19 would likely bring a weakened consumer demand.

The Conference Board’s Consumer Confidence Index increased in June after little change in May.

The index increased to 98.1 in June, a 12.2 point (14.2%) increase over May’s value. Consumer

confidence remains below pre-pandemic levels but partially rebounded in June. The Expectations

Index, the forward-looking component of the Consumer Confidence Index, increased to 106 points

for June, an increase of 8.4 points over May’s value. The Present Situation Index, also a part of the

Consumer Confidence Index, is based on consumers analysis of the labor market and current business

conditions. The Present Situation Index increased to 86.2, an increase of 17.8 points (26.0%). Despite

these increases, the Conference Board determined that the economy remains weak because consumers

are uncertain on the path to recovery due to a potential COVID-19 resurgence.

The Employment Trends Index is an index from the Conference Board. It aggregates eight labor

market indicators and can display erratic movements month to month. The employment trends index

increased in June for the second consecutive month, following sharp declines in prior months. The

index increased to 49.1 in June, an 8.4 percent increase from May; however, the index is down 54.8

percent from a year ago. All the eight components of the index made positive increases in June. The

gains in recent months may be threatened by a resurgence of the coronavirus. Some governments

have delayed opening plans which could curtail hiring and recruiting. The unemployment rate could

potentially increase or plateau in upcoming months depending upon on the virus’s proliferation.

The travel and hospitality industries have faced significant challenges during the pandemic. The

Transportation Security Administration (TSA) tracks how many travelers go through TSA

checkpoints as “throughput”. Total travel throughput for June was down 81.2 percent from last year.

Despite this decline airline travel has been increasing but it remains nowhere close to 2019 levels.

STR, a company that provides analytics and data on the hospitality sector, estimates that it will take

11 quarters for the number of room nights sold at hotels to rise to 2019 levels. Current occupancy

levels are lower, causing hoteliers to compete for market share and causing discounting. Each week

demand and occupancy rates continue to gradually rise; however, STR is currently forecasting the

hotel occupancy rate will average only 41.6 percent during calendar year 2020. Drive-to destinations

and places with outdoor activities such as lakes and beaches continue to push demand for hotels

upward.




Compared to daily travel in 2019, the Ohio Turnpike saw an average daily decline of 45.9 percent

between March 1 and June 21, 2020. Commercial vehicle travel declined an average of 2.5 percent

over the same period. Passenger vehicle travel has been affected by stay-at-home orders but began to

rise as restrictions have been lifted. Travel activity is expected to increase as consumer confidence is

restored with the easing of COVID-19 restrictions.

Industrial Activity

The Industrial Production Index, produced by the Board of Governors of the Federal Reserve System,

is an indicator that measures real output for manufacturing, mining, and gas and electric utility

facilities located in the United States. The total industrial production increased slightly 1.4 percent

in May as many factories began to reopen in at least partial capacity after the COVID-19 suspension.

Even with this increase, total industrial production in May was still 15.4 percent below its

pre-pandemic level in February. Manufacturing production also began to rebound in May,

increasing by 3.8 percent, yet remaining 16.9 percent below February levels.

The durable goods sector index increased by 5.8 percent, with the largest gain being in motor vehicles

and parts – one of Ohio’s major industries – which rose by 120.8 percent. This level of the durable

goods sector index is still a 62.8 percent reduction from May of 2019. Increases of between eight and

ten percent occurred in several industries including nonmetallic, aerospace and miscellaneous

transportation equipment as well as furniture and related products. Production in the

non-durable goods sector increased by 2.3 percent with sizable gains in textile and product mills,

apparel and leather, printing and support, and plastics and rubber products. These gains were

partially offset by losses in mining (-6.8%) and utilities (-2.3%) loss in the utilities sector.

Among industries aside from motor vehicles that contribute to a large portion of manufacturing

employment in Ohio, production increased in Rubber and Plastics by 9.6 percent, Transportation and

Equipment by 8.1 percent, Fabricated Metals by 1.5 percent, Food, Beverage and Tobacco Products

by 1.4 percent and Chemicals by 0.5 percent. Primary Metal Production, however, decreased by 4.8

percent in May, along with a 2.0 percent reduction in Electronics and Appliances and 1.2 percent in

Machinery production.

Produced by the Institute for Supply

Management (ISM), the Purchasing

Managers Index (PMI) measures

expansions and contractions of the

manufacturing economy. A PMI reading

above 50 percent indicates that the

manufacturing economy is generally

expanding, while below 50 percent it is

generally contracting. In June, the PMI for

the United States expanded to 52.6,

compared to 43.1 in May and 41.5 in April.

This is the strongest expansion of factory

activity since April 2019 after three months

of interruptions related to the COVID-19

response.




The new orders index increased dramatically from 40.8 to 53.3 in June. Likewise, the production

index rose from 33.2 to 57.3, both above forecasters expectations. These increases suggest that the

economy may experience a demand-driven expansion as we enter the third and fourth quarters of

2020.

Of the eighteen industries tracked by the Manufacturing ISM® Report on Business, 13 reported

growth between May and June. Four of the industries with a major effect on Ohio’s manufacturing

employment, however, experienced a contraction in June but at lower levels than prior months. These

include transportation equipment, fabricated metal products, machinery, and primary metals.

Anecdotal evidence from purchasing and supply executives nationwide surveyed by ISM was

cautiously optimistic in June. A source in the transportation equipment industry reported that they

were “[g]radually ramping production back in our plants. Most of our supply base continued to

operate during COVID-19, so we are not seeing a significant supply risk. Will be monitoring supply

chain financial health closely”. A contact in the primary metals industry said: “We are seeing an

increase in orders as the economy starts to get rolling again. Slow and steady, sales are increasing. So

far, so good”.

Construction

Total construction spending increased 2.1 percent in May. Throughout the first five months this year

construction spending remained 5.7 percent higher than the same time period in 2019. Private sec-

tor construction spending declined 3.3 percent in May due to a 4.0 percent drop in residential

construction along with a 2.4 percent decrease in non-residential construction. Public construc-

tion spending increased by 1.2 percent in May due to an increase in highway construction of

2.8 percent and education construction of 0.1 percent.

Privately-owned housing units approved via building permits increased 14.4 percent in May,

however the rate remains 8.8 percent below the May 2019 rate. Building permits in the Midwest

increased in May by 18.4 percent after a 19.0 percent decline in April. Privately owned housing

starts increased 4.3 percent for May but remain 23.2 percent below the May 2019 rate. Housing starts

in the Midwest declined 1.5 percent in May. This is the third month that housing starts have declined

in the Midwest. Privately-owned housing completions declined 7.3 percent in May and are 9.3 percent

below the May 2019 level.

New home sales increased 16.6 percent in May after a 5.2 percent decline in April. Existing home

sales declined 9.7 percent in May, marking the third month of declines in a row. The increase in new

home sales is due to an surge of purchases in the South and West. The Midwest’s new home sales

decreased 6.4 percent in May after an increase in April. Existing home sales in the Midwest fell in

May by 9.6 percent continuing a decline that began in January. Record low mortgage rates are fueling

a rebound in housing activity.




Homebuilders reported an increase

in activity in June due to low

mortgage rates. The Housing

Market Index (HMI) from the

National Association of

Homebuilders (NAHB) steeply

increased in June to 58 from 37 in

May. This is a 56.8 percent increase

and is the second month in a row that

the HMI has risen. The HMI for the

Midwest rose from 32 in May to 51

in June.




REVENUES

In contrast to the April and May revenue results, June demonstrated returns only moderately below

the original budgeted estimates and showed a slight year-over-year increase. Personal income tax

showed the largest decline from estimate, associated with the postponement of income tax payment

deadlines. Non-auto sales tax was below estimate, but by much less than in April and May.

Meanwhile, auto sales tax revenues were well above estimate, presumably partially due to a catch-up

from the historically negative performance of the two prior months.

June total GRF receipts totaled $3.5 billion and were $126.9 million (3.7%) above estimate, primarily

due to a substantial overage in Federal grant receipts amounting to $313.3 million (33.7%). For the

month, tax revenues were $50.5 million (-2.2%) below estimate, a considerably stronger outcome

than last month when revenues ended 13.0 percent below forecast. Non-tax receipts and transfers,

excluding Federal grants, were $136.0 million (-76.3%) below estimate, driven by the Transfers In

category as discussed below.

For the year, total GRF revenues ended $559.4 million (-1.6%) below estimate. Fiscal year 2020 tax

revenues were $1.1 billion (-4.6%) below estimate. More broadly, total non-federal revenues finished

the year $1.2 billion (-4.8%) below estimate. Federal grants were $613.1 million (6.2%) above

estimate.

Category Includes: YTD

Variance

%

Variance

Tax receipts

Sales & use, personal income, corporate franchise,

financial institutions, commercial activity, natural gas

distribution, public utility, kilowatt hour, foreign &

domestic insurance, other business & property taxes,

cigarette, alcoholic beverage, liquor gallonage, &

estate

-$1,098.7 -4.6%

Non-tax receipts Federal grants, earnings on investments, licenses &

fees, other income, intrastate transfers $673.3 6.6%

Transfers Budget stabilization, liquor transfers, capital reserve,

other -$134.0 -62.3%

TOTAL REVENUE VARIANCE: -$559.4 -1.6%

Non-federal revenue variance -$1,172.5 -4.8%

Federal grants variance $613.1 6.2%

For the month, the largest overage relative to estimate occurred with Federal grants, at $313.3 million

(33.7%). Overages were spread across numerous other sources, including auto sales tax at $34.1

million, ISTVs at $17.1 million, and the commercial activity tax at $12.9 million.

Transfers-In accounted for the largest shortfall from estimate in June, at $142.5 million (-97.3%),

followed by the personal income tax at $78.0 million (-9.6%) and the non-auto sales tax at $35.6

million (-4.2%). Only three other sources had a negative variance exceeding $1 million: earnings on

investments, other income, and kilowatt-hour tax.




The table below shows that sources exceeding estimate (an overage totaling $395.6 million) in June

outweighed the size of revenue underperformers (a variance of $268.7 million), resulting in a $126.9

million net positive variance from estimate.

GRF Revenue Sources Relative to Monthly Estimates – June 2020

($ in millions)

Individual Revenue Sources Above Estimate Individual Revenue Sources Below Estimate

Federal grants $313.3 Transfers in-other ($142.5)

Auto sales tax $34.1 Personal income tax ($78.0)

ISTVs $17.1 Non-auto sales tax ($35.6)

Commercial activity tax $12.9 Earnings on investments ($7.3)

Foreign insurance tax $6.3 Other income ($3.1)

Cigarette and other tobacco products tax $3.6 Other sources below estimate ($2.2)

Other sources above estimate $8.3

Total above $395.6 Total below ($268.7) (Note: Due to rounding of individual sources, the combined sum of sources above and below estimate may differ slightly from the total variance.)

The preceding chart displays the relative contributions of various revenue sources to the overall

variation between actual and estimated non-federal revenues for fiscal year 2020, with the net

difference amounting to -$1.2 billion. The chart graphically depicts the major shortfalls for several

revenue sources, especially the outsized influence of personal income tax performance relative to

estimate.




On a year-over-year basis, monthly receipts (including transfers) were $266.7 million (8.2%) larger

than in June of the previous fiscal year. The net increase was due to Federal grants, which were $410.8

million (49.4%) above last year. Declines were observed for transfers in-other amounting to $158.2

million (-97.5%), and for personal income tax amounting $95.7 million (-11.5%).

For the entire fiscal year, total revenues ended $262.1 million (-0.8%) below last year, after being up

$643.8 million as recently as March. The source with the highest growth is Federal grants at $718.1

million (7.4%). Non-auto sales tax ended above last year despite major declines in April and May, at

$111.3 million (1.2%). Personal income tax revenue accounts for the largest decline at $1.0 billion

(-11.5%).

Non-Auto Sales Tax

GRF non-auto sales and use tax collections in June totaled $810.7 million and were $35.6 million

(-4.2%) below the estimate. Non-auto sales tax revenue was $282.8 million (-3.0%) below estimate

for fiscal year 2020. In June, non-auto GRF sales tax revenue increased by $16.8 million (2.1%) from

the previous year. For the year, non-auto sales tax revenue ended above last year’s level, by $111.3

million (1.2%).

June non-auto sales tax revenue reflects a composite of May and June consumption. In a typical

month, approximately one-half of a given month’s revenue emanates from anticipated activity in the

current month (from those larger vendors required to make “accelerated” payments equal to 75

percent of their estimated sales tax liability for the current month); the other half is from activity

occurring in the previous month (comprised of any remaining tax owed by accelerated vendors on

their prior month’s sales activity, and the tax paid by smaller, non-accelerated vendors on their total

prior month’s sales activity).

Although it was modestly short of estimate, June’s revenue performance was substantially stronger

than the three previous months. During the March through May period, non-auto sales tax experienced

a total $346.2 million (-14.9%) negative variance from estimate. As discussed in the last several

editions of this report, non-auto sales tax was greatly impacted as measures were taken to respond to

and contain the pandemic. Data sources indicate that the preponderance of the March through May

revenue decline can be attributed to two categories: accommodations and food services (restaurants

& bars); and “GAFO” retailers, consisting of general merchandise, clothing, appliances & electronics,

furniture & home furnishings, and sporting goods retailers.

Advance monthly U.S. retail sales data published by the Census Bureau confirms improving retail

performance in May. In April, total sales by food services and retail establishments, excluding motor

vehicles and gasoline stations, declined 14 percent from the prior year; in May, the year-to-year

decline was 4 percent.

The improved non-auto sales tax results in June comport with expectations expressed in last month’s

report. Nonetheless, major questions remain for non-auto sales tax during fiscal year 2021. The initial

“rebound” from the early pandemic response will be followed by consumer spending challenged by

an evolving public health environment, the effects of tapering federal fiscal policy responses, and

broader questions about US macroeconomic conditions in the coming year.




Auto Sales Tax

June auto sales tax revenues were $175.7 million, which was $34.1 million (24.1%) above the

estimate. Total fiscal year 2020 auto sales tax revenues ended $45.3 million (-2.9%) below the

estimate. June revenues were $58.0 million (49.2%) above the prior year, and fiscal year 2020

revenues were $1.1 million (0.1%) above the previous year.

Based on a seasonally adjusted annual rate (the amount of sales that occurred during the month after

being adjusted for seasonal fluctuations and expressed as an annualized total), U.S. sales of new light

vehicles in June are estimated to be about 13 million units. Although a rebound from the 12.1 million

sales level in May, this level remained well below the approximately 17 million-unit level in February

2020, prior to the full onset of the pandemic. The level in June 2019 was also about 17 million units.

The exuberant growth in June 2020 Ohio auto sales tax revenue diverges from the more-modest U.S.

new vehicle sales data. It is possible that used vehicle sales explain some of this divergence, i.e., Ohio

used vehicle sales may have performed much stronger than new vehicle sales did. Probably a more

resonant underlying explanation is that, during this period of great volatility and uncertainty,

nationwide motor vehicle sales activity for a given month will simply not neatly conform with activity

occurring in Ohio.

As seen in the outcomes observed in May and especially in June, it is apparent that auto sales are

recovering from their deep April trough. June’s strong activity must include some “catch-up” effects

for purchases that consumers had planned, but did not make in March or earlier in the second quarter

due to the pandemic. Although OBM does not expect a replication of June’s outsized performance,

further signs of a recovery for the auto sector may well be discerned in July revenues.

Personal Income Tax

June GRF personal income tax receipts totaled $738.5 million and were $78.0 million (-9.6%) below

the estimate. For the fiscal year, personal income tax revenue was $845.1 million (-9.7%) below

estimate. On a year-over-year basis, June income tax collections were $95.7 million (-11.5%) below

June 2019 collections while collections for the year ended $1.0 billion (-11.5%) below the previous

year.

In contrast to May, the month’s variance from estimate was almost entirely associated with tax

payment categories whose due dates were postponed to July. Although the Ohio labor market remains

challenged by the pandemic-induced rash of layoffs, reductions in hours worked, and wage

reductions, the June withholding tax payments showed only a slight downturn relative to expectations.

For the month, withholding tax payments fell short of estimate by only $2.3 million (-0.3%). This is

a notable contrast to the prior month when withholding payments were $103.8 million less than

estimate. Withholding ended $133.3 million (-1.3%) below estimate for fiscal year 2020, with the

year’s negative variance mostly attributable to April and May.




The year-over-year withholding tax results in June show a decline of $12.9 million (-1.9%). However,

the year-to-year comparison is somewhat exaggerated by the effects of tax policy changes. The fiscal

year 2020-2021 budget bill (House Bill 166) enacted a four percent reduction in personal income tax

rates effective with tax year 2019. Consistent with this rate cut, a four percent employer withholding

rate reduction took effect in January 2020. If not for the rate reduction, there would have been an

estimated 2.2 percent increase in employer withholding collections in June instead of the 1.3 percent

decline that was actually observed.

As indicated above, the payment categories affected by the postponed deadlines had notable impacts

on overall income tax performance. The June payments would primarily have come from those

taxpayers that deferred payment of their 2019 tax liability beyond the regular April 15 deadline but

chose to pay before the July 15 extended deadline.

Payments accompanying tax year 2019 annual returns or annual return extensions are not typically

very significant in June, since they are normally due in April. Because of the extension, payments

this June were much larger than usual, representing a $65.5 million increase from estimate. For the

year, however, such payments were $652.1 million (-60.9%) below estimate, a decline attributable to

the payment extension. Most of this variance should be recouped in July, when the payments are due.

Quarterly estimated payments were originally anticipated to be significant since June is one of the

four months in which such payments are typically due. However, actual June payments were $85.9

million, amounting to a $106.9 million (-55.5%) reduction from estimate. Fiscal year 2020 estimated

payments ended $173.8 million (-19.2%) below estimate. OBM anticipates most of this shortfall to

be received in early fiscal year 2021, when the returns become due.

Refund claims in June were $33.2 million (67.6%) larger than originally expected. Despite this, June’s

refund performance offset only a small portion of the combined April and May refund shortfall of

$259 million, which was attributable to the extension of the annual return filing date. The projected

refund balance, amounting to $226 million, is expected to be paid to taxpayers in early fiscal year

2021 as returns are filed near the July 15 due date. For the fiscal year, refunds were $127.5 million

(-5.8%) below estimate and were $31.0 (1.5%) larger than in fiscal year 2019.

JUNE PERSONAL INCOME TAX RECEIPTS BY COMPONENT ($ in millions)

Actual

June

Estimate

June $ Var

Actual

June-2020

Actual June-

2019

$ Var

Y-0ver-Y

Withholding $682.7 $685.0 ($2.3) $682.7 $695.6 ($12.9)

Quarterly Est. $85.9 $192.8 ($106.9) $85.9 $192.8 ($106.9)

Annual Returns & 40 P $75.5 $10.0 $65.5 $75.5 $11.1 $64.4

Trust Payments $3.3 $8.5 ($5.2) $3.3 $10.7 ($7.4)

Other $5.8 $7.4 ($1.6) $5.8 $7.2 ($1.4)

Less: Refunds ($82.3) ($49.1) ($33.2) ($82.3) ($45.9) ($36.4)

Local Distr. ($32.3) ($38.1) $5.8 ($32.3) ($37.2) $4.9

Net to GRF $738.5 $816.5 ($78.0) $738.5 $834.2 ($95.7) (Note: The net totals and variance amounts may differ slightly from computations using the rounded actual and estimated figures provided in

the table.)




Commercial Activity Tax (CAT)

The CAT was $12.9 million above estimate in June, reversing the $11.1 million negative variance in

May. For the year, it ended $33.2 million (2.0%) above estimate. CAT revenue was just $0.1 million

(-0.4%) below last June and ended the year $42.1 million (2.6%) above last year. The June results

bolster previous months’ comments about CAT revenue. Because of the economic downturn one

might have expected a substantial disruption to fourth-quarter CAT revenues. In reality, the results

conform with OBM’s revised expectations of a relatively mild impact. The bulk of CAT tax payments

made during the quarter reflected taxable gross receipts activity in the January-March period, only a

small portion of which occurred during the pandemic. That said, the fuller effects of the economic

impacts of COVID-19 on the CAT will materialize in July, as taxes paid in that month will begin to

reflect the April-June gross receipts reporting period.

GRF Non-Tax Receipts

GRF non-tax revenues in June totaled $1.3 billion and were $319.8 million (33.3%) above estimate.

This variance was primarily attributable to the Federal Grants category, which was $313.3 million

(33.7%) above estimate. This positive variance was associated with the enhanced Federal Medical

Assistance Percentage (FMAP) authorized in the Families First Coronavirus Response Act. For fiscal

year 2020, federal revenues were $718.1 million (7.4%) above fiscal year 2019. For the year, federal

grants were $613.1 million (6.2%) above estimate.

Revenues from earnings on investments were $7.3 million (-26.5%) below estimate for the month

due to lower than estimated interest earnings for the April-June quarter. Total fiscal year 2020

revenues in this category were still $21.4 million (19.4%) above estimate due to higher interest

earnings during the beginning of the year.

Revenues from ISTV’s were $17.1 million in June though no revenue was estimated. This overage

was the result of the GRF being reimbursed for COVID-19 related expenses utilizing the federal

Coronavirus Relief Fund. Total fiscal year 2020 revenues in this category were $28.7 million which

was $15.5 million (117.8%) above estimate.

Transfers into the GRF in June totaled $4.0 million and were $142.5 million (-97.3%) below estimate.

On a year-over-year basis, June transfers were $166.9 million (-67.3%) below fiscal year 2019. Both

the monthly and year-over-year variances were caused by planned transfers of commercial activity

tax revenues being delayed until fiscal year 2021.



7/2/2020 GENERAL REVENUE FUND RECEIPTS ACTUAL FY 2020 VS ESTIMATE FY 2020

($ in thousands)

MONTH YEAR-TO-DATEACTUAL ESTIMATE $ % ACTUAL ESTIMATE $ %

REVENUE SOURCE JUNE JUNE VAR VAR Y-T-D Y-T-D VAR VAR TAX RECEIPTS Non-Auto Sales & Use 810,721 846,300 (35,579) -4.2% 9,183,047 9,465,800 (282,753) -3.0% Auto Sales & Use 175,741 141,600 34,141 24.1% 1,502,737 1,548,000 (45,263) -2.9% Subtotal Sales & Use 986,461 987,900 (1,439) -0.1% 10,685,784 11,013,800 (328,016) -3.0% Personal Income 738,463 816,500 (78,037) -9.6% 7,881,337 8,726,400 (845,063) -9.7% Corporate Franchise 14 0 14 N/A (435) 0 (435) N/A Financial Institutions Tax 27,407 24,600 2,807 11.4% 214,903 189,700 25,203 13.3% Commercial Activity Tax 18,535 5,600 12,935 231.0% 1,671,680 1,638,500 33,180 2.0% Petroleum Activity Tax 2,124 2,300 (176) -7.7% 8,737 10,000 (1,263) -12.6% Public Utility 2,858 2,400 458 19.1% 141,034 140,000 1,034 0.7% Kilowatt Hour 19,395 21,300 (1,905) -8.9% 331,795 334,700 (2,905) -0.9% Natural Gas Distribution 0 0 0 N/A 59,735 77,900 (18,165) -23.3% Foreign Insurance (8,021) (14,300) 6,279 43.9% 305,073 292,000 13,073 4.5% Domestic Insurance 282,401 280,000 2,401 0.9% 303,038 301,200 1,838 0.6% Other Business & Property 389 0 389 N/A 399 0 399 N/A

Cigarette and Other Tobacco 146,662 143,100 3,562 2.5% 913,017 891,700 21,317 2.4% Alcoholic Beverage 6,455 5,300 1,155 21.8% 53,642 56,000 (2,358) -4.2% Liquor Gallonage 4,996 3,900 1,096 28.1% 53,386 50,000 3,386 6.8%

Estate 2 0 2 N/A 71 0 71 N/A Total Tax Receipts 2,228,141 2,278,600 (50,459) -2.2% 22,623,196 23,721,900 (1,098,704) -4.6% NON-TAX RECEIPTS Federal Grants 1,242,500 929,190 313,310 33.7% 10,482,045 9,868,943 613,102 6.2% Earnings on Investments 20,203 27,500 (7,297) -26.5% 131,370 110,000 21,370 19.4% License & Fees 539 702 (163) -23.2% 66,638 58,326 8,312 14.3% Other Income 407 3,478 (3,071) -88.3% 92,650 77,676 14,974 19.3% ISTV'S 17,064 0 17,064 N/A 28,744 13,200 15,544 117.8% Total Non-Tax Receipts 1,280,713 960,871 319,842 33.3% 10,801,448 10,128,145 673,303 6.6%

TOTAL REVENUES 3,508,854 3,239,471 269,383 8.3% 33,424,644 33,850,045 (425,401) -1.3%

TRANSFERS Budget Stabilization 0 0 0 N/A 0 0 0 N/A Transfers In - Other 3,975 146,475 (142,500) -97.3% 81,020 215,044 (134,024) -62.3% Temporary Transfers In 0 0 0 N/A 0 0 0 N/A Total Transfers 3,975 146,475 (142,500) -97.3% 81,020 215,044 (134,024) -62.3%

TOTAL SOURCES 3,512,829 3,385,946 126,883 3.7% 33,505,664 34,065,090 (559,426) -1.6%

Table 1

7/2/2020 GENERAL REVENUE FUND RECEIPTSACTUAL FY 2020 VS ACTUAL FY 2019

($ in thousands)

MONTH YEAR-TO-DATEJUNE JUNE $ % ACTUAL ACTUAL $ %

REVENUE SOURCE FY 2020 FY 2019 VAR VAR FY 2020 FY 2019 VAR VAR TAX RECEIPTS Non-Auto Sales & Use 810,721 793,941 16,779 2.1% 9,183,047 9,071,740 111,307 1.2% Auto Sales & Use 175,741 117,773 57,968 49.2% 1,502,737 1,501,684 1,053 0.1% Subtotal Sales & Use 986,461 911,714 74,747 8.2% 10,685,784 10,573,424 112,360 1.1% Personal Income 738,463 834,199 (95,736) -11.5% 7,881,337 8,910,214 (1,028,877) -11.5%

Corporate Franchise 14 500 (486) -97.2% (435) 2,074 (2,509) -121.0% Financial Institutions Tax 27,407 23,573 3,834 16.3% 214,903 202,443 12,460 6.2% Commercial Activity Tax 18,535 18,601 (67) -0.4% 1,671,680 1,629,544 42,136 2.6% Petroleum Activity Tax 2,124 3,208 (1,084) -33.8% 8,737 11,608 (2,871) -24.7% Public Utility 2,858 4,930 (2,072) -42.0% 141,034 143,161 (2,127) -1.5% Kilowatt Hour 19,395 19,902 (507) -2.5% 331,795 343,635 (11,840) -3.4% Natural Gas Distribution 0 0 0 N/A 59,735 75,902 (16,167) -21.3% Foreign Insurance (8,021) (7,852) (168) -2.1% 305,073 296,342 8,730 2.9% Domestic Insurance 282,401 260,770 21,630 8.3% 303,038 276,048 26,990 9.8% Other Business & Property 389 309 80 25.8% 399 309 89 28.9%

Cigarette and Other Tobacco 146,662 137,183 9,479 6.9% 913,017 918,179 (5,162) -0.6% Alcoholic Beverage 6,455 5,261 1,194 22.7% 53,642 56,250 (2,608) -4.6% Liquor Gallonage 4,996 4,569 427 9.3% 53,386 50,342 3,044 6.0% Estate 2 37 (34) -93.4% 71 154 (83) -54.2% Total Tax Receipts 2,228,141 2,216,906 11,235 0.5% 22,623,196 23,489,630 (866,434) -3.7% NON-TAX RECEIPTS Federal Grants 1,242,500 831,661 410,839 49.4% 10,482,045 9,763,899 718,146 7.4% Earnings on Investments 20,203 32,093 (11,890) -37.0% 131,370 114,360 17,011 14.9% License & Fee 539 833 (293) -35.2% 66,638 64,414 2,224 3.5% Other Income 407 2,469 (2,062) -83.5% 92,650 71,165 21,485 30.2% ISTV'S 17,064 0 17,064 N/A 28,744 16,439 12,306 74.9% Total Non-Tax Receipts 1,280,713 867,055 413,658 47.7% 10,801,448 10,030,277 771,171 7.7%

TOTAL REVENUES 3,508,854 3,083,961 424,893 13.8% 33,424,644 33,519,907 (95,263) -0.3%

TRANSFERS Budget Stabilization 0 0 0 N/A 0 0 0 N/A Transfers In - Other 3,975 162,151 (158,176) -97.5% 81,020 247,888 (166,868) -67.3% Temporary Transfers In 0 0 0 N/A 0 0 0 N/A Total Transfers 3,975 162,151 (158,176) -97.5% 81,020 247,888 (166,868) -67.3%

TOTAL SOURCES 3,512,829 3,246,112 266,717 8.2% 33,505,664 33,767,794 (262,130) -0.8%

Table 2


DISBURSEMENTS

NOTE: In response to the COVID-19 pandemic, state agencies have deviated from their original

disbursement plans. Some agencies have increased spending in targeted areas to mitigate the health

and economic effects of coronavirus. Simultaneously, all agencies are under orders to reduce

spending through pay and hiring freezes, and additional budgetary oversight from the Office of

Budget and Management. These factors began to be reflected in the March disbursement estimates

and result in substantial variances from original disbursement plans.

June GRF disbursements, across all uses, totaled $1.9 billion and were $768.1 million (-29.3%) below

estimate. This variance was primarily attributable to below estimate disbursements in the Medicaid

and the Primary and Secondary Education categories. On a year-over-year basis, June total uses were

$525.0 million (-22.1%) lower than those of the same month in the previous fiscal year, with a

decrease in the Primary and Secondary Education category largely responsible for the difference.

Year-over-year variances from the estimate by category are provided in the table below.

Category Description Year-Over-

Year Variance % Variance

Expenditures and

transfers between

agencies (ISTVs)

State agency operations, subsidies, tax

relief, debt service payments, and

pending payroll (if applicable)

($517.6) -21.8%

Transfers Temporary or permanent transfers out of

the GRF that are not agency expenditures ($7.5) -84.8%

TOTAL DISBURSEMENTS VARIANCE: ($525.0) -22.1%

GRF disbursements are reported according to functional categories. This section contains information

describing GRF spending and variances within each of these categories.

Primary and Secondary Education

This category contains GRF spending by the Ohio Department of Education. June disbursements for

this category totaled $391.7 million and were $144.4 million (-26.9%) below estimate. This variance

was primarily attributable to below estimate spending in the Foundation Funding and Pupil

Transportation line items due to subsidy payments to school districts being reduced as a result of

budgetary control measures implemented in response to the economic impact of COVID-19. This

below estimate spending was partially offset by above estimated disbursements for the Early

Childhood Education and Student Assessment line items due to timing of payments which offset prior

month underspending.

Expenditures for the school foundation program totaled $351.7 million and were $148.9 million

(-29.7%) below estimate. Year-to-date disbursements were $7,846.9 million, which was $340.6

million (-4.2%) below estimate. On a year-over-year basis, disbursements in this category were

$234.1 million (-37.4%) lower than for the same month in the previous fiscal year while year-to-date

expenditures were $296.8 million (-3.6%) lower than the same point in fiscal year 2019. The

year-over-year and year-to-date variances were the result of budgetary control measures imple-

mented in response to the economic impact of COVID-19.




Higher Education

June disbursements for the Higher Education category, which includes non-debt service GRF

spending by the Department of Higher Education, totaled $143.8 million and were $43.3 million

(-23.1%) below the estimate. This variance was primarily attributable to disbursements in the State

Share of Instruction line and various other line items that were below estimate by $40.5 million due

to budgetary control measures implemented in response to the economic impact of COVID-19. The

remaining monthly variance was due to disbursements in the Ohio College Opportunity Grant and

Choose Ohio First Scholarship line items that were below estimates in the amount of $4.7 million as

a result of lower than expected requests for reimbursement from higher education institutions. This

variance was partially offset by spending in the National Guard Scholarship program line that was

above estimate in the amount of $1.9 million because of higher than expected requests for

reimbursement from higher education institutions.

Year-to-date disbursements were $2.3 billion, which was $118.7 million (-4.9%) below the estimate.

On a year-over-year basis, disbursements in this category were $36.4 million (-20.2%) lower than for

the same month in the previous fiscal year while year-to-date expenditures were $10.3 million (-0.5%)

lower than at the same point in fiscal year 2019.

Other Education

This category includes non-debt service GRF expenditures made by the Broadcast Educational Media

Commission, the Ohio Facilities Construction Commission, the Ohio State School for the Blind, the

Ohio School for the Deaf, as well as disbursements made to libraries, cultural, and arts organizations.

June disbursements in this category totaled $2.2 million and were $1.6 million (-42.0%) below

estimate. Year-to-date disbursements were $82.1 million, which was $1.0 million (1.3%) above

estimate. On a year-over-year basis, disbursements in this category were $1.3 million (-37.3%) lower

than for the same month in the previous fiscal year while year-to-date expenditures were $11.4 million

(16.1%) higher than at the same point in fiscal year 2019.

Medicaid

This category includes all Medicaid spending on services and program support by the following eight

agencies: the Department of Medicaid, the Department of Mental Health and Addiction Services, the

Department of Developmental Disabilities, the Department of Health, the Department of Job and

Family Services, the Department of Aging, the Department of Education, and the State Board of

Pharmacy.




Expenditures

June GRF disbursements for the Medicaid Program totaled $1.0 billion and were $431.5 million

(-29.3%) below estimate and $163.5 million (-13.5%) below disbursements for the same month in the

previous fiscal year. The monthly variance was primarily attributable to the receipt of additional

federal reimbursement (known as enhanced FMAP), as outlined in the Families First Coronavirus

Response Act, for calendar quarters one and two. Additionally, both the monthly and year-over-year

variances were attributable to the timing of the availability and use of non-GRF funding sources in

the Department of Medicaid. Receipt of certain non-GRF revenue was delayed and therefore was

unable to be expended until June, where it further offset GRF costs.

Fiscal year 2020 GRF disbursements totaled $15.5 billion and were $49.1 million (-0.3%) below

estimate and $419.0 million (2.8%) above fiscal year 2019 disbursements. The total yearly variance

was partially attributable to declining enrollment throughout much of the first three quarters of the

fiscal year. The COVID-19 crisis did cause increases in enrollment for the period of March-June,

however, the federal government’s decision to provide enhanced FMAP mitigated some of the

additional costs to the GRF as the Medicaid program’s non-GRF funding sources were able to

leverage significant additional federal dollars.

June all-funds disbursements for the Medicaid Program totaled $2.4 billion and were $29.1 million

(-1.2%) below estimate and $123.0 million (5.4%) above disbursements for the same month in the

previous fiscal year. The variance was primarily attributable to the receipt of enhanced FMAP (from

calendar quarter 1 and quarter 2) and the timing of the use and availability of non-GRF resources as

mentioned above. While GRF expenditures were significantly below estimate, non-GRF expenditures

were significantly above estimate and essentially offsetting.

Fiscal year 2020 all-funds disbursements totaled $28.2 billion and were $240.5 million (-0.8%) below

estimate and $1.5 billion (5.5%) above disbursements for the same point in the previous fiscal year.

The fiscal year 2020 all-funds variance was primarily attributable to below estimate spending in the

fee-for-service program, both Medicaid fee-for-service and Department of Developmental

Disabilities (DDD) services, and in below estimate administration related expenses. Underspending

in the Medicaid fee-for-service program was largely attributable to COVID related underutilization,

both generally, and specifically in the Medicaid Schools Program. Underspending in DDD services

was also attributable to some general underutilization but was primarily attributable to enhanced

FMAP revenue receipt and expenditure reconciliation. Fiscal year 2020 administrative expenses were

below estimate due primarily to lower than anticipated information technology expenses, some of

which were delayed or reduced in scope due to COVID related spending control measures.

Despite the general all-funds underspending, it should be noted that the managed care program was

above estimate for the fiscal year by $234.3 million. This overage was largely attributable to COVID

related enrollment increases during the months of March through June. Additionally, previously

reported quality assurance corrective payments contributed to the above-estimate spending for this

category.




The chart below shows the current month’s disbursement variance by funding source.

(in millions, totals may not add due to rounding)

June Actual June Projection Variance Variance %

GRF $1,437.1 $1,474.6 $ (37.6) -2.5%

Non-GRF $842.8 $948.0 $ (105.2) -11.1%

All Funds $2,279.8 $2,422.6 $ (142.8) -5.9%

Enrollment

Total June enrollment was 2.98 million, which was 164,765 (5.8%) above estimate and 168,636

(6.0%) above enrollment for the same period last fiscal year. Fiscal year 2020 average monthly

enrollment was 2.83 million and was essentially at estimate.

June enrollment by major eligibility category was: Covered Families and Children, 1.66 million;

Aged, Blind and Disabled (ABD), 499,919; and Group VIII Expansion, 691,191.

*Please note that these data are subject to revision.

Health and Human Services

This category includes non-debt service GRF expenditures by the following state agencies: Job and

Family Services, Health, Aging, Developmental Disabilities, Mental Health and Addiction Services,

and others. Examples of expenditures in this category include childcare, TANF, administration of the

state’s psychiatric hospitals, operating subsidies to county boards of developmental disabilities,

various immunization programs, and Ohio’s long-term care ombudsman program. To the extent that

these agencies spend GRF to support Medicaid services, that spending is reflected in the Medicaid

category.


estimate. Year-to-date disbursements were $1.3 billion, which was $109.4 million (-7.5%) below




Department of Job and Family Services

June disbursements for the Department of Job and Family Services totaled $18.2 million and were

$23.2 million (-56.0%) below estimate. This variance was primarily attributable to the TANF

State/Maintenance of Effort line item, which was $9.6 million below estimate due to budgetary

control measures implemented in response to the economic impact of COVID-19, and the Child Care

State/Maintenance of Effort line item, which was $9.2 below estimate due to a change in the child

care disbursement schedule during the pandemic period. The Program Operations line item was $4.6

million below estimate due to not receiving anticipated invoices for the Electronic Benefits Transfer

contract for SNAP and various other IT contract support and maintenance.




Department of Mental Health and Addiction Services

June disbursements for the Department of Mental Health and Addiction Services totaled $11.6 million

and were $11.1 million (-49.0%) below estimate. This variance was primarily attributable to

disbursements in the Hospital Services line item, which was $12.1 million below estimate, and the

Addiction Services Partnership with Corrections line item, which was $1.2 million below estimate.

This variance was partially offset by disbursements in the Community Innovations line item, which

was $2.4 million above estimate due to delayed May and June subsidy payments for Workforce

Development being paid in June.

Department of Veteran Services

June disbursements for the Department of Veteran Services totaled $2.1 million and were $1.5 million

(-74.4%) below estimate. This variance was primarily attributable to disbursements in the Veteran’s

Homes line item, which was $1.4 million below estimate.

Justice and Public Protection

This category includes non-debt service GRF expenditures by the Department of Rehabilitation &

Correction, the Department of Youth Services, the Attorney General, judicial agencies, and other

justice-related entities.


estimate. Year-to-date disbursements were $2.4 billion, which was $107.2 million (-4.3%) below


than for the same month in the previous fiscal year while year-to-date expenditures were $163.5

million (7.4%) higher than at the same point in fiscal year 2019.

Adjutant General’s Department

June disbursements for the Adjutant General totaled $2.76 million and were $1.58 million (131.1%)

above estimates. This variance was primarily attributable to disbursements in the Central

Administration line, which was $2.07 million above estimates due to additional spending approved

by the Controlling Board from the Emergency Proposes/Contingency Fund to support state active

duty costs incurred as a result of civil unrest beginning May 30, 2020.

Department of Public Safety

June disbursements for the Department of Public Safety totaled $1.8 million and were $2.8 million

(-60.6%) below estimate. This variance was primarily attributable to disbursements in the Lo-

cal Disaster Assistance, Security Grants, and Security Grants - Personnel line items, which were

$1.6 million below estimate due to the timing of subsidy payments. Additionally, the EMA Operat-

ing and Investigative Unit Operating line items were $0.7 million below estimate due to various

COVID-19 implications, including budgetary control measures implemented in response to the eco-

nomic impact of COVID-19, expenses for the EMA operating line shifting to the federal

Coronavirus Relief Fund, and reduced investigative costs from the closing of bars and other

liquor-licensed establishments during Ohio’s Stay at Home order. Finally, the Recovery Ohio Law

Enforcement line item was $0.4 million below estimate due to the timing of subsidy payments

and budgetary control measures implemented in response to the economic impact of COVID-19.




Department of Rehabilitation and Correction

June disbursements for the Department of Rehabilitation and Correction totaled $68.6 million and

were $56.8 million (-45.3%) below estimate. This variance was primarily attributable to variances in

the Institutional Operations line item, which was $42 million below estimate; the Institution Medical

Services line item, which was $7.3 million below estimate; the Parole and Community Operations

line item, which was $3.3 million below estimate; the Institution Education Services line item, which

was $1.7 million below estimate; the Community Non-Residential Programs line item, which was

$1.5 million below estimate and the Administrative Operations line item, which was $1.1 million

below estimate. All these variances were caused by the timing of the final payroll, which occurred in

July rather than in June as anticipated, and reduced expenditures due to budgetary control measures

implemented in response to the economic impact of COVID-19.

Department of Youth Services

June disbursements for the Department of Youth Services totaled $14.5 million and were $4.5 million

(-23.6%) below estimate. This variance was primarily attributable to disbursements in the RECLAIM

Ohio line item which was $3.7 million below estimate due to the timing of the final payroll, which

occurred in July rather than in June as anticipated and reduced expenditures due to budgetary control

measures implemented in response to the economic impact of COVID-19.

Office of the Attorney General

June disbursements for the Office of the Attorney General totaled $1.6 million and were $0.9 million

(0.8%) above estimate. This variance was primarily attributable to disbursements in the Operating

Expenses line item, which was $1.2 million above estimate as the Office moved expenditures from

non-GRF line items. This variance was partially offset by below estimate spending in the Drug Abuse

Response Team Grant, Drug Testing Equipment, Internet Crimes Task Force, and the Pike County

Capital Case lines.

Public Defender Commission

June disbursements for the Public Defender Commission totaled $9.2 million and were $0.9 million

(10.1%) above estimate. This variance was primarily attributable to disbursements in the County

Reimbursement ALI which was $1.2 million above estimate due to additional payments being made

to compensate for lower reimbursement amounts earlier in the year.

General Government

This category includes non-debt service GRF expenditures by the Department of Administrative

Services, Department of Natural Resources, Development Services Agency, Department of

Agriculture, Department of Taxation, Office of Budget and Management, non-judicial statewide

elected officials, legislative agencies, and others.


estimate. Year-to-date disbursements were $440.4 million, which was $88.9 million (-16.8%) below







Department of Agriculture

June disbursements for the Department of Agriculture totaled $0.6 million and were $6.2 million

(-90.4%) below estimate. This variance was primarily attributable to the Soil and Water Phospho-

rous Program line item, which was $5.0 million below estimate due to the timing of the program’s

subsidy payments and other expenditures. Department of Natural Resources

June disbursements for the Department of Natural Resources totaled $2.6 million and were $2.7

million (-51.4%) below estimate. This variance was primarily attributable to the Parks and Recreation

line item, which was $2.3 million below estimate due to many parks being closed for safety reasons

related to the ongoing impact of COVID-19.

Development Services Agency

June disbursements for Development Services Agency totaled $2.0 million and were $3.2 million

(-61.1%) below estimates. This variance was primarily attributable to below estimated spending in

the Technology Programs and Grants, TechCred Program, Appalachia Assistance, and Sector Part-

nership Networks (Industry Sector Partnership) line items. These line items were below esti-

mate due to budgetary control measures implemented in response to the economic impact of

COVID-19.

Department of Transportation

June disbursements for the Department of Transportation totaled $1.7 million and were $5.3 million

(-75.4%) below estimate. This variance was primarily attributable to disbursements in the Public

Transportation - State line item, which was$5.1 million below estimate due to the timing of subsidy

payments and budgetary control measures implemented in response to the economic impact of

COVID-19.

Property Tax Reimbursements

Payments from the property tax reimbursement category are made to local governments and school

districts to reimburse these entities for revenues foregone as a result of the 10.0 percent and 2.5

percent rollback, as well as the homestead exemption. Property tax reimbursements totaled $26.3

million in June and were $9.6 million (-26.8%) below estimate. Fiscal year 2020 disbursements

totaled $1.8 billion and were $42.0 million (-2.3%) below estimate and $0.6 million lower than fiscal

year 2019 disbursements.

Debt Service

June payments for debt service totaled $74.0 million and were $57,000 (-0.1%) below estimate. Fiscal

year 2020 expenses in this category totaled $1.45 billion and were $10.2 million (-0.7%) below

estimate and $19.1 million (1.3%) higher than fiscal year 2019 expenses.

Transfers Out

June transfers out totaled $1.3 million and were $12.4 million (-90.2%) below estimate. Fiscal year

2020 transfers out totaled $669.5 million and were $14.2 million (-2.1%) below estimate and $103.5

million (-13.4%) lower than fiscal year 2019 transfers out.



7/2/2020

YEAR-TO-DATEFunctional Reporting Categories ACTUAL ESTIMATED $ % YTD YTD $ %Description JUNE JUNE VAR VAR ACTUAL ESTIMATE VAR VAR

Primary and Secondary Education 391,678 536,114 (144,436) -26.9% 7,846,873 8,187,474 (340,601) -4.2%Higher Education 143,760 187,057 (43,297) -23.1% 2,282,270 2,400,971 (118,701) -4.9%Other Education 2,153 3,709 (1,556) -42.0% 82,091 81,061 1,029 1.3%Medicaid 1,043,185 1,474,642 (431,457) -29.3% 15,471,844 15,520,897 (49,053) -0.3%Health and Human Services 42,143 79,717 (37,574) -47.1% 1,343,999 1,453,397 (109,399) -7.5%Justice and Public Protection 112,742 175,595 (62,852) -35.8% 2,385,951 2,493,163 (107,212) -4.3% General Government 15,655 40,502 (24,846) -61.3% 440,437 529,349 (88,912) -16.8%Property Tax Reimbursements 26,254 35,868 (9,614) -26.8% 1,800,605 1,842,600 (41,995) -2.3%Debt Service 73,955 74,012 (57) -0.1% 1,449,932 1,460,175 (10,243) -0.7%

Total Expenditures & ISTV's 1,851,525 2,607,214 (755,690) -29.0% 33,104,001 33,969,088 (865,086) -2.5%

Transfers Out:

BSF Transfer Out 0 0 0 N/A 0 0 0 N/AOperating Transfer Out 1,337 13,700 (12,363) -90.2% 669,497 683,675 (14,178) -2.1%Temporary Transfer Out 0 0 0 N/A 0 0 0 N/A

Total Transfers Out 1,337 13,700 (12,363) -90.2% 669,497 683,675 (14,178) -2.1%

Total Fund Uses 1,852,862 2,620,914 (768,053) -29.3% 33,773,499 34,652,763 (879,264) -2.5%

Table 3 GENERAL REVENUE FUND DISBURSEMENTS

ACTUAL FY 2020 VS ESTIMATE FY 2020($ in thousands)

MONTH

7/2/2020

YEAR-TO-DATEFunctional Reporting Categories JUNE JUNE $ % ACTUAL ACTUAL $ %Description FY 2020 FY 2019 VAR VAR FY 2020 FY 2019 VAR VAR

Primary and Secondary Education 391,678 625,813 (234,135) -37.4% 7,846,873 8,143,715 (296,842) -3.6%Higher Education 143,760 180,168 (36,408) -20.2% 2,282,270 2,292,590 (10,320) -0.5%Other Education 2,153 3,436 (1,283) -37.3% 82,091 70,726 11,365 16.1%Medicaid 1,043,185 1,206,680 (163,495) -13.5% 15,471,844 15,052,848 418,995 2.8%Health and Human Services 42,143 55,133 (12,991) -23.6% 1,343,999 1,272,017 71,981 5.7%Justice and Public Protection 112,742 160,880 (48,138) -29.9% 2,385,951 2,222,454 163,497 7.4%General Government 15,655 24,933 (9,277) -37.2% 440,437 391,270 49,167 12.6%Property Tax Reimbursements 26,254 50,559 (24,305) -48.1% 1,800,605 1,801,184 (579) 0.0%Debt Service 73,955 61,476 12,479 20.3% 1,449,932 1,430,790 19,142 1.3%

Total Expenditures & ISTV's 1,851,525 2,369,077 (517,552) -21.8% 33,104,001 32,677,595 426,407 1.3%

Transfers Out:

BSF Transfer 0 0 0 N/A 0 657,503 (657,503) N/AOperating Transfer Out 1,337 8,789 (7,452) -84.8% 669,497 115,503 553,994 479.6%Temporary Transfer Out 0 0 0 N/A 0 0 0 N/A

Total Transfers Out 1,337 8,789 (7,452) -84.8% 669,497 773,006 (103,509) -13.4%

Total Fund Uses 1,852,862 2,377,866 (525,004) -22.1% 33,773,499 33,450,601 322,898 1.0%

MONTH

Table 4

($ in thousands)

GENERAL REVENUE FUND DISBURSEMENTSACTUAL FY 2020 VS ACTUAL FY 2019


Table 5 FUND BALANCE

GENERAL REVENUE FUND FISCAL YEAR 2020

($ in thousands)

JULY 1, 2019 Beginning Cash Balance* 1,538,011.8

Plus FY 2020 Actual Revenues 22,942,599.2

Plus FY 2020 Actual Federal Revenues 10,482,045.1

Plus FY 2020 Actual Transfers to GRF 81,019.8

Total Sources Available for Expenditures & Transfers

35,043,676.0

Less FY 2020 Actual Disbursements** 33,104,001.4

Less Actual Total Encumbrances as of June 30, 2020*** 485,334.7

Less FY 2020 Actual Transfers Out 669,497.9

Total Actual Uses 34,258,834.0

FY 2020 UNENCUMBERED ENDING FUND BALANCE 784,842.0

* Includes reservations of $391.6 million for prior year encumbrances. After accounting for this adjustment, the estimated unencumbered beginning fund balance for fiscal year 2020 is $1,146.4 million.

** Disbursements include estimated spending against current year appropriations and prior year encumbrances.

***Encumbrances for fiscal year 2020 include $73.1 million for the final pay period of the fiscal year. This

payment was disbursed in fiscal year 2021 using fiscal year 2020 appropriations and is therefore considered

a fiscal year 2020 obligation.




OBM staff that contributed to the development of this report are:

Jason Akbar, Ben Boettcher, Frederick Church, Ariel King, Todd Clark, Adam Damin, Paul

DiNapoli, Florel Fraser, Teresa Goodridge, Chris Guerrini, Chris Hall, Sharon Hanrahan, Charlotte

Kirschner, Sári Klepacz, Taylor Pair, Steven Peishel, Craig Rethman, Tara Schuler, Travis Shaul,

Jasmine Winston, Melissa Snider, Nick Strahan, Luis da Cruz and Kevin Schrock.



Documents

State of Ohio Monthly Financial Report for June 2020 · 1.8 million jobs lower than in February. Financial activities. added 32,000 jobs with over half of the increase coming from